How Economic Policy Uncertainty Shapes Firm Financing and Investment: A Pakistani Perspective

Authors

  • Dr. Aysha Sami Latif Assistant Professor, University of Peshawar.
  • Dr. Muhammad Fahad Siddiqi Lecturer, Institute of Businesses and Management Sciences, The University of Agriculture

DOI:

https://doi.org/10.63075/x479vv36

Abstract

This study examines the influence of economic policy uncertainty on firm investment and financial leverage in Pakistan. A fixed-effects model is employed to examine the link using panel data from non-financial enterprises listed on the Pakistan Stock Exchange (PSX) from 2014 to 2023. The results indicate that elevated levels of economic policy uncertainty markedly decrease firm financial leverage and investment activity. The findings indicate that in times of policy uncertainty, Pakistani companies are inclined to avoid debt funding and implement more cautious investment approaches. The results remain stable even when different metrics for important variables are utilized, affirming the analysis's robustness.

Keywords:Economic Policy Uncertainty, Financial Leverage, Investment, Pakistan Stock Exchange

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Published

2025-05-16

Issue

Vol. 3 No. 2 (2025): Advance Journal of Econometrics and Finance

Section

Articles

How to Cite

How Economic Policy Uncertainty Shapes Firm Financing and Investment: A Pakistani Perspective. (2025). Advance Journal of Econometrics and Finance, 3(2), 78-87. https://doi.org/10.63075/x479vv36